CYPRUS Trends and Developments Contributed by: Constantinos A Adamides, Scordis, Papapetrou & Co LLC
jurisdiction of the Court, it requires the existence of some form of nexus between the applicant and the State of Enforcement if the application is filed directly in that state. The Court then proceeded to address the ques- tion whether the mere registration of the Russian Applicant Company as a foreign company hav- ing a place of business in Cyprus, pursuant to Section 347 of the Companies Law, Cap. 113, constitutes “residence” of the Russian Applicant Company in Cyprus. The answer was negative. Citing Borodin, where it was found that in the case of a Russian individual “residence [under Article 27 of the Treaty] is not possible to exist on papers only [and that] physical presence of the person, accompanied by their intention to reside temporarily, or as the case may be, per- manently at the place where they chose to have their residence is required”, the Court concluded that no less stringent test should be applied in the case of foreign (Russian) companies, noting that there is nothing in the Treaty or Cap. 113 to suggest that the mere registration by a foreign company of a place of business in Cyprus shall be deemed to constitute residence of that com- pany in Cyprus. In this respect, it is interesting to highlight the fact that although there was Cypriot case law (the Promsvyazbank cases) brought to the attention of the Court by the advocates for the Russian Applicant Company suggesting that the existence of a place of business (a branch) in Cyprus fully satisfies the criterion of residence, the Court accepted the submissions put forward by the advocates for the Russian Respondent that the facts in those cases were materially dif- ferent from the facts of the present case since in the Promsvyazbank cases (i) the argument of the respondents that the relevant licence for the operation of the branch of Promsvyazbank was suspended was not submitted by way of an
affidavit (as it should) but it was only submitted during the stage of submissions (and therefore there was a lack of a factual basis to support the relevant argument); and (ii) it was apparent from the facts that the branch of Promsvyaz- bank was not limited to a mere registration but it conducted business including banking business. The Court therefore concluded that whether the Russian Applicant Company resides in Cyprus or not must be decided by reference to the full spectrum of facts of the case and not only by ref- erence to the registration of the Russian Appli- cant Company as a foreign company pursuant to Section 347 of Cap. 113, noting in this respect that the facts must refer to some sort of activ- ity being carried on in the State of Enforcement even though such activity is ancillary to its main activity. In support of its conclusion, the Court relied on well-known English textbooks widely recognised and relied upon by the courts as well as relevant English case law. Citing Palmer’s Company Law, 24th Edition, Ste- ven & Sons Ltd (1987) at page 1658, the Court explained that the concept of “established place of business” of the English provision, which is equivalent to Article 347(1) of Cap. 113, entails “a specified or identifiable place at which [the company] carries on business” that “there must be some ‘visible sign or physical indication’ that the company [must have] a connection with par- ticular premises from which habitually or with some degree of regularity business is conduct- ed” and that “it is not sufficient for the company to carry on business through an agent”. And “if the company is incorporated outside Great Brit- ain has a locality satisfying this test in this coun- try, it has an established place of business here even if it does not carry out its main activities at that locality but restricts its activities there to matters incidental to its main business”.
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